Yahoo Finance CVS Health's (NYSE:CVS one-year decrease in earnings delivers investors with a 28% loss
The simplest way to benefit from a rising market is to buy an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. That downside risk was realized by CVS Health Corporation (NYSE:CVS) shareholders over the last year, as the share price declined 30%. That falls noticeably short of the market decline of around 2.5%. Longer term investors have fared much better, since the share price is up 12% in three years. The falls have accelerated recently, with the share price down 20% in the last three months. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report.
Since CVS Health has shed US$5.3b from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.
See our latest analysis for CVS Health
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Unfortunately CVS Health reported an EPS drop of 51% for the last year. This fall in the EPS is significantly worse than the 30% the share price fall. So the market may not be too worried about the EPS figure, at the moment -- or it may have expected earnings to drop faster.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
Dive deeper into CVS Health's key metrics by checking this interactive graph of CVS Health's earnings, revenue and cash flow.
A Different Perspective
We regret to report that CVS Health shareholders are down 28% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 2.5%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Longer term investors wouldn't be so upset, since they would have made 5%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand CVS Health better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 3 warning signs for CVS Health you should know about.
We will like CVS Health better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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